More Australians will be dying than being born in 40 years as major report predicts future of lower growth

Australia is facing a demographic turning point that could reshape its economy, social services, and political landscape. The government’s Seventh Intergenerational Report warns that within the next four decades, the number of deaths will outpace births, signalling a shift toward an ageing population and slower growth. This forecast not only highlights looming challenges for health care and pensions but also intersects with rapid advances in artificial intelligence, raising questions about how a shrinking workforce will adapt to an increasingly automated world.

What Happened

The latest intergenerational report, released by the Treasury and the Australian Bureau of Statistics, projects that by 2065 more Australians will die each year than are born. The trend is driven by a sustained decline in fertility rates, which have fallen below the replacement level of 2.1 children per woman, and by rising life expectancy that pushes the median age upward. The report also flags a slowdown in population growth, with net overseas migration expected to taper as global mobility patterns change.

In addition to the demographic shift, the report dedicates a new chapter to the “uncertain age of artificial intelligence.” It outlines how AI could both mitigate and exacerbate labour shortages, offering productivity gains while potentially displacing workers in sectors already strained by an ageing workforce. Policymakers are thus urged to consider technology as a double‑edged sword in the coming decades.

Key Details

By 2065 the proportion of Australians aged 65 and over is projected to rise from roughly 16% today to over 25%, while the share of those under 15 is expected to drop below 12%. Fertility is forecast to average 1.6 children per woman through the 2030s, a level not seen since the early 1970s. Meanwhile, life expectancy is set to climb to 84 years for women and 81 for men, extending the period of old‑age dependency.

The report estimates that the total population will grow from 26 million now to about 30 million by 2065, a modest increase compared with the rapid expansion of the past half‑century. Net overseas migration, a key driver of growth, is projected to average 150,000 per year, down from the peak of over 250,000 in the early 2020s. These figures translate into a shrinking labour force, with the working‑age population (15‑64) expected to decline by roughly 10%.

Background

Australia’s demographic trajectory has been shaped by post‑World War II baby booms, high immigration, and relatively generous welfare policies. Over the past two decades, however, cultural shifts toward smaller families, higher female labour participation, and delayed childbearing have reduced birth rates. Simultaneously, medical advances and healthier lifestyles have extended longevity, creating a classic “ageing pyramid.”

The intergenerational reports, produced every decade since 2001, serve as a strategic planning tool for governments. They assess how population changes will affect fiscal sustainability, infrastructure demand, and social cohesion. The seventh edition is the first to integrate a dedicated analysis of AI, reflecting the growing consensus that technology will be a pivotal factor in addressing—or worsening—the challenges of a smaller, older workforce.

Why It Matters

An ageing population places pressure on the pension system, health care, and aged‑care services. With fewer contributors to the tax base, funding the Age Pension and Medicare could become increasingly strained, potentially prompting reforms such as higher contribution rates or reduced benefits. Moreover, a larger share of seniors may increase demand for aged‑care facilities, home‑care services, and chronic‑disease management, reshaping public‑sector spending priorities.

From an economic perspective, a declining labour pool could dampen GDP growth, reduce innovation capacity, and limit Australia’s competitiveness in global markets. Conversely, AI and automation could offset labour shortages by boosting productivity, but only if the workforce is equipped with the necessary digital skills. The report warns that without targeted education and reskilling programs, the benefits of AI may accrue to a narrow segment of the economy, widening inequality.

What Happens Next

The government is expected to respond with a suite of policy measures. These may include incentives for higher fertility, such as expanded parental leave and child‑care subsidies, as well as reforms to immigration policy to sustain population growth. Investment in health‑tech and AI‑driven care models is also likely, aiming to deliver services more efficiently to an older demographic.

Education and training will become central to the national agenda. Initiatives to upskill workers in data analytics, machine learning, and robotics are already being discussed, with a view to creating a future‑ready labour force that can complement AI rather than compete with it. Regional development plans may also shift, focusing on attracting younger families to areas with housing affordability and employment opportunities.

In summary, the Seventh Intergenerational Report paints a sobering picture of Australia’s demographic future: a nation where deaths will outnumber births within 40 years, leading to slower growth and heightened fiscal pressures. Yet the same report highlights a potential pathway through technology and proactive policy. How Australia navigates this crossroads will determine whether it can maintain prosperity and social cohesion in an era defined by both an ageing populace and the rapid rise of artificial intelligence.